New era for charity law

New charity law that puts public benefit at the heart of charitable activity and raises question marks over the status of private schools was confirmed in the Queen's speech today.

After months of anxious expectation, the UK's voluntary sector will now have a modern legal framework. It is the first time that charity law has been updated since the 1600s.

The bill is likely to mean that charities must not only demonstrate that their purpose is charitable, but also of public benefit. A public benefit test, assessed case-by-case by watchdog the Charity Commission, will decide whether organisations should be granted charitable status based on the value their work brings to the wider community.

Debate has raged around the question of how a proposed public benefit test would impact on existing charities, especially private schools and hospitals, since the draft bill was published on May 17.

The draft bill was subject to pre-legislative scrutiny by a joint committee which published a report on September 30 criticising the "schism" between the Charity Commission and the Home Office on how a public benefit test would be applied to private institutions.

The committee recommended that the government should consider reviewing the status of private schools and hospitals unless the institutions could clearly demonstrate how they brought benefit to their communities in order to qualify for charitable status and the tax breaks that come with it.

New definitions of charitable purpose, such as the advancement of amateur sports and the advancement of human rights, will open the door for hundreds of new organisations to apply for charitable status. Prior to the new legislation charitable purpose was limited to the prevention and relief of poverty and the advancement of education, religion and health.

The bill will also mean that professional fundraisers, such as the street fundraisers known as "charity chuggers", will be required to give people information about how they are being paid to fundraise on behalf of charities or campaigning groups.